New York Markets After Hours

Dow Chemical swings to loss on restructuring

SaabiraChaudhuri

Dow Chemical Co.
DOW, -1.44%
swung to a fourth-quarter loss as the chemical company was weighed down by $990 million in charges tied to a restructuring unveiled last year as well as a $220 million write-down, though core earnings improved.

Chemical makers are wrestling with the impact of destocking as well as weak construction and electronics markets. Dow, the world's second-largest chemical producer by revenue, in October unveiled plans to shut 20 facilities and eliminate 2,400 jobs in Europe, the U.S. and Japan in a bid to counter the impact of slowing global demand. At the time, it also said it would trim capital expenditure as part of efforts to boost cost savings to $2.5 billion from a target that had already been doubled to $1.5 billion over the past year.

Dow Chemical Chief Executive Andrew N. Liveris has previously warned of destocking by Chinese clients alongside stagnant growth in Europe, with only the U.S. and its large agribusiness unit providing some respite.

Mr. Liveris said Thursday that "the second half of 2012 saw significant deterioration in the markets we serve, particularly in China."

Still, he added the company's agricultural sciences business "continues to outperform, driven by its technology pipeline" and performance plastics also "posted strong results in the quarter, bolstered by feedstock advantages in North America and the Middle East, coupled with improving pricing momentum." In addition, he said Down's Kuwait joint ventures posted "exceptional results."

Dow reported a loss of $631 million versus a year-earlier profit of $65 million. On a per-share basis, which factors in preferred dividends, Dow's per-share loss was 61 cents versus a year-earlier loss of two cents. The latest period included 94 cents a share in expenses from restructuring actions and a write-down in the company's formulated systems business. Excluding one-time items, earnings were 33 cents from 25 cents a share.

Net sales declined 1.3% to $13.92 billion.

Analysts polled by Thomson Reuters most recently predicted earnings of 34 cents a share on revenue of $13.7 billion.

Gross margin widened to 14.2% from 11.8% as input costs fell 4%.

Volume was flat as a 5% decline in Western Europe offset volume growth in Asia Pacific, which was up 5%, and North America and Latin America, which were each up 1%. Excluding Dow's feedstocks and energy operating segment, volume in North America increased 7%, reflecting improving demand.

The company also noted prices decreased by about 1% or $91 million, while purchased feedstock and energy costs declined $413 million compared with a year earlier. On a sequential basis, prices were up $333 million, or 2%.

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